Reader Stories: Starting to see financial fitness muscle!

This story comes to us from reader EmJay. EmJay's story is the epitome of getting rich slowly, and readers can learn from her effort. This postis part of the Reader Stories series. Some reader stories contain general advice; others are examples of how a GRS reader achieved financial success or failure. These stories feature folks with all levels of financial maturity and income.

Although we didn't declare it to be at the outset, 2012 was The Year We Slayed Our Debt. We refinanced our house in late 2011 to get a shorter interest rate and term, and when we got that magical 10-year mortgage (which will even be a bit shorter than that using a biweekly payment schedule!!), something clicked for me.

All of a sudden, there was light at the end of the tunnel. If we could pay off our house in 10 years, we could debt-free by 40! And if we could pay off our house, what else could we pay off? What else could we do with all that money that would be available? This was really exciting!

I became obsessed—in a good, healthy, and (mostly) sane sort of way. I read Get Rich Slowly and other blogs, borrowed books on frugality from the library, and listened to personal finance podcasts to keep my motivation up. I recorded our spending more regularly than before and compared it with previous years' spending to see where we had incrementally and unintentionally inflated our lifestyle over time. And then I slowly deflated it.

We paid off my student loans, his vehicle, and then his loans to get rid of our debt, and then built up our emergency fund. This was all in a year, and faster than my original estimate of about 18 months.

On to phase two

My husband and I recently spent an evening planning our next steps toward financial independence. We have more money available now that we're not making extra debt or savings payments. I was actually really looking forward to this conversation — partly because I'm a nerd and it meant more number crunching, but more importantly, it was an opportunity to plan out what we want our future to look like.

First, we looked back over the last several months of expenses to see how much money we were really talking about. This ends up being about $2,400 per month, which seems like an incredible sum since I started this snowball with $500 per month from a pay raise in late 2011. Huzzah to the debt slayers!

We knew that increasing our retirement contributions would be one of our next steps, so we then calculated 15 percent of our gross income to see how much we should be putting in each year. We are currently putting in a little (to make sure we get that match), so we'll be increasing that about $850 per month.

We then talked about and prioritized our other goals to decide what to do with the remaining $1,550. We decided to increase our charitable donations by $200 per month. We also put high-priority on saving up for new (used) vehicles. We hope to get two more years from my car and four years from his truck. Since we're not sure how much longer my car will actually last, however, we're going to save a lot for future vehicles this year—about $1,100 per month. The rest will go to our medium-term goal of paying off the house.

Over the next few years, our monthly “car payment to ourselves” will gradually decrease to a more reasonable amount as we build that savings up, and then we'll making increasingly large extra payments on the house. We also identified longer-term goals for traveling and buying recreational forest land but are not funding these this year.

So we have our new plan and are in the process of implementing it. We've visited our financial planner to decide our best options for funding retirement and have started identifying organizations to which we'll donate. It's been really thrilling to see our progress so far, and this is itself incredibly motivating as we move ahead. We've started to turn our debt snowball into a savings snowball. And someday we'll roll it into a giant snowball for having fun and helping others.

Author: GRS Reader

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There are 31 reader responses to "Reader Stories: Starting to see financial fitness muscle!".

Jane Savers @ The Money Puzzlesays

Looks like a great plan. Especially the carpayments to ourselves idea. I just started that myself but in a much smaller way. I hope my car lasts a very long time because I can only manage about 25 dollars per biweekly pay.

I am working on my emergency fund and I am trying to get one month of expenses but emergencies keep popping up. I would be happiest with one year of expenses but that is an unachievable goal with my income and debt level. How long will your emergency fund last?

You now what? One month’s expenses is fine for now. Have you thought about saving up one month’s expenses first, THEN building the emergency fund? Once the emergency fund is established, you can resume saving your goal of one year’s expenses.

Saving for one month’s expenses is a great move. I did that last year and I had such a feeling of accomplishment and relief. Knowing that if I had an emergency expense, I wouldn’t have to use a credit card and owe even MORE money was worth all the sacrifice.

You’re the classic example of why being mindful is so important to better financial health. In the age of automatic everything, it’s easy to relax and loosen up on the money reigns—which can be a recipe for disaster to many of us. Excellent post!!

Great job! I see you mentioned paying off the house by 40 and no mention of children, so I’m wondering if your financial plan considers the option of children. (I’m married, 32, and no plans for kids, so it’s not a judgment, just a curiosity!) I’m also curious about the details on things you cut back on to increase your “extra” cash at the end of the month. Where did you find the greatest savings?

My husband and I are both about 30 and are planning to remain child free, so that does give us a lot more flexibility since we don’t have to plan for an entire (large) category of spending.

The little things do add up, and you have to watch them, but for us it seemed like we’d have one big thing, like a trip, that would bust our budget. We avoided buying anything big if we could (e.g., he got a used mountain bike for $100 rather than a new one and I delayed by plans to get a fantastic new bike until this year) and took local vacations to camp and visit family where there were fewer expenses.

And the debt snowball frees up the most money. We started with my $80 student loan and just a few hundred extra dollars from a raise. Once we knocked out a few loans, it grew into a very nice sum.

Hey EmJay,
Congrats on all your good work so far, especially the charitable donations! I post a LOT about analyzing and killing that mortgage debt you’re speaking of in a (mostly) sane sort of way too ;-) so feel free to take a look at some of the great ways I’ve found to pay it down quicker. Also ecochic I look at how you can still pay things off amazingly quick even if you have kids.

On another note, when you’re making your decision to give to charity, I’d HIGHLY suggest a visit to http://www.givewell.org. Using their information will guarantee that your money gets used as best as possible.

Congratulations! Recently, I managed to lose a significant amount of weight (the yelling from my primary care physician of 13 years triggered it). The first few pounds came off easy and that is what motivated me to move forward. Had those first pounds been difficult, I would have been far less motivated.

Money is the same way or as JD would say “It is all psychological”. Having a firm grip on one’s finances *really* helps to understand and prioritize the expenses.

really interesting post, love the charitable giving. At the end of summer two of my kids will finsih college and if they get jobs I will have a good chink of money each moth to use for the next project… made e realise I need to sit down with my husband again to plan for some long term goals

Do either of these sentences from the editor’s introductory paragraph make sense to anyone? “This story comes to us from reader EmJay, who is what TK from where TK. . . . Want submit your own reader story?”

Sorry, the edit button is not working again. I wanted to add a big congratulations to the OP. This is a fantastic example of how small returns can quickly lead to big returns once you start focusing on finances. It’s wonderful how OP’s debt snowball turned into a savings snowball. Well done!

I like the imagery of building our financial fitness muscles over time. You had rapid gains in 2012 — but maybe slower fitness gains in the prior years. My own financial muscles have gotten stronger as I’ve tamed my addiction to costly “stuff”. Just posted on that, actually. Warm wishes on your continued success, EmJay.

I love reading about people who are getting their stuff together. I hope that after awhile mine will start to look more promising. I’m down to 50k of student loans from 70k and can’t wait until I can make a reader story of my own. Nice job!

Wow, how inspiring! You are taking all the right steps for a secure financial future. I think it’s great that you’ve increased charitable donations by such a large sum. Unfortunately this is something that many people miss in their monthly budget.

That’s awesome. Having the end in sight in terms of becoming debt free is exciting and motivating. I’m guessing that you’re husband and you don’t have children and aren’t planning on having any because you didn’t mention them here and they (of course) are a major expense. Not hinting that either lifestyle choice is a better one, but it certainly seems a little easier on the finances if you don’t have to worry about putting kids through college and whatnot.

Congratulations! You’re much farther along than we are. We have one more student loan and our house. Good idea on putting a ton toward replacing your vehicles, so you’ll be prepared when the time comes. Looks like you’re headed down the right path. Enjoy it! I’ll see you there in a few years.

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My name is J.D. Roth. I started Get Rich Slowly in 2006 to document my personal journey as I dug out of debt. Then I shared while I learned to save and invest. Twelve years later, I've managed to reach early retirement! I'm here to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you get rich slowly. Read more.

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